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Car buy on lease or finance




Hi , I am new in canada and can not afford to pay 30k now to buy new car . I saw some options on web about 0% finance /lease / cash . But I am confused what to do ? I want to drive new car and want to use it atleast 3 years . I prefer Toyota RAV4 car as it is useful in remote location like Fort Mcmurray where I am living now .
Please share your experience and advice me in detail .
Thanks in advance

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DSD

 
dsd

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Member since: Aug 04
Posts: 296
Location: Alberta

Post ID: 200165 24-08-12 16:46:32
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JRF
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Member since: Jul 04




Posts: 1852
Location: GTA, Ontario



If the lease APR is around 2%, why not lease for 3-4 years and finance it after that next 4 years.

RAV4 should be good for 8 years easily and after 8 years it could be used as a down payment (say 4-5K) + another 5K cash would get you a new car later on Finance which would be your own in 5 years and continue this until you could do that...

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Post ID: 200168 24-08-12 21:44:24
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aqua
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Member since: Jan 11




Posts: 134
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My personal take is to lease always. At the end of the lease term, you can choose to buy the vehicle, if you like it or just return it and re-lease.

 
Post ID: 200177 25-08-12 19:22:39
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bhootnath
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Member since: Mar 11




Posts: 969
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I never tried lease mainly because fobia around the conditions that are put at the end of the term.
E.g. If there are scratches, how would they re-calculate the value if you are not buying/re-leasing? What about the limitations on kilometers.
Since you are new and may need to know driving conditions,better to go for a low cost used SVU in that area than the brand new to start with. This will also help in lowering the insurance cost a bit. Insurance for newer vehicles is always higher, not sure leasing/owning makes any diffference to the cost of insurance. I myself Would like to know the first hand experiences of leasing the vehicles.

Good luck!


 
Post ID: 200212 28-08-12 08:53:18
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love_n_peace
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Member since: Jan 08




Posts: 269
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Your query depends on how heavy your pocket is. Also how much your income vs expenses are.

As you are new to canada, I will suggest you to go for used Rav 4 or CRV. You can finance 2010 vehicle, which will save you money that helps you to settle in this country. Dealer have lots of hidden cost when you buy a new vehicle. Recently I bought 2008 honda vehicle for 16 K and end up paying around 20k.

Do not get lured with 0% down, 0% lease rate, there is always * mark on % and that * is might worth of 8-10K.

Make all calculation how much you will end up paying at end of term.

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Post ID: 200220 28-08-12 22:31:41
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aqua
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Member since: Jan 11




Posts: 134
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New vehicles typically include destination charge (varies with manufactures.. can be up to 2K), tire tax ($35) and A/C tax ($100) on top of the listed price. New or Used, you pay 13% HST (in ON), $20 for new plates ($10 for plate transfer, if you already have one) and the sticker price (was $74, increased a bit this year).

Some dealers will try to charge Admin fee, Handling charges etc. Those can be removed. They will say No, but as part of negotiation, you can get them removed. I always talk about the 'On the road' price with the dealer.

@bhootnath: Scratches, extra kms etc. dont' matter to lease vehicles, if you are buying it out. In most cases, the buy out price for the lease is less than the market price. It will make sense to buy it out and sell privately. If you are re-leasing, you can easily get the repair/excess km charges waived - as long as they are reasonable. Dealers also sell some kind of protection package (adds upto another $80-90 to the monthly payments) that will cover for the scratches (even major ones). Kms limits are normally in the 16-24K per year range. Most won't exceed them. (They keep it high - hence the residual value comes down.)

I have mostly leased. Never regretted it. Now going to lease my 7th car.. Audi this time.

@OP: I would say lease. That way, your monthly payments are lower and you keep the money. There is nothing like having liquid $ in Canada, especially since you are new here. Once you settle and figure out the actual monthly income and expenses, you can make a call as to what you want to do with the $.


 
Post ID: 200224 29-08-12 08:21:31
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desi28
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Member since: Apr 10




Posts: 67
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I have had a leased sedan. Payment was never less than financed vehicles when i was in the market. I leases just to avoid long term commitments being new in the country. I had all the worries bhootnath mentioned. But at the end, when 3 months remaining, dealer gave me lucrative offer for new car in exchange of leased vehicle. And when they sell new vehicle, they dont bother much about condition of old car. Not to mention i saved 3 month lwase. But you have to check with many dealers as this offer is generally from company.

 
Post ID: 200225 29-08-12 09:15:49
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bhootnath
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Member since: Mar 11




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Quote:
Originally posted by aqua

Scratches, extra kms etc. dont' matter to lease vehicles, if you are buying it out. In most cases, the buy out price for the lease is less than the market price. It will make sense to buy it out and sell privately. If you are re-leasing, you can easily get the repair/excess km charges waived - as long as they are reasonable. Dealers also sell some kind of protection package (adds upto another $80-90 to the monthly payments) that will cover for the scratches (even major ones). Kms limits are normally in the 16-24K per year range. Most won't exceed them. (They keep it high - hence the residual value comes down.)




Cool thanks!


 
Post ID: 200228 29-08-12 12:22:07
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hchheda
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Member since: Aug 05




Posts: 2241
Location: Woodbridge


I have a slightly different view on this topic.

First, since the OP is a new immigrant, his access to financing is limited. So even if the dealers are advertising 0% (APR??) there is a fine print of OAC (On Approved Credit). The OPs best option right now is to buy a used all wheel or 4 wheel drive VAN or SUV suitable for conditions in Fort McMurray.

For those with access to credit/financing, the decision is not black/white - but depends on the requirements :

1. How much you drive every year?
2. Are you a new driver (in N.A.) or atleast have sufficient experience driving in the local weather conditions?
3. How much are you willing to spend on repairs and maintenance?
4. Do you prefer Domestic or Imports?

My thumb rule is most domestic cars/SUV are designed for local conditions and better suited for conditions here - but short on life. They also require more frequent visits to the Garage. These are better leased and returned at the end of the lease to be switched with a newer model. Be careful of the lease contract and residual value they put in there. Besides the wear/tear and mileage figures : the down payment, % APR and residual value hugely impact the monthly cost. The dealer salesman might suggest a lower residual value so that it is cheaper to buy one at end of lease - but this will increase the monthly installment for present. Do your homework and study the residual value (depreciated current value) of equivalent model in the market and use that as a reference and try to have a residual value more than that in the lease contract. Finally, NEVER fall in love with the vehicle - if you get emotional, you will be paying a higher price for it.

On the other hand, imports are originally designed for their local conditions and adapted to conditions here - some adapt well, others not so well. Imports are also more expensive but require fewer trips to garage and last longer, hence higher residual value. This makes it attractive to lease them (since they do not depreciate as much as domestic) - but if you plan to own it for a long time, it is better to have it financed. The monthly amount is higher, but the returns are more attractive.

0% APR is myth : If you pay 100% cash, the cost of same vehicle will drop $3000~$5000, but if you finance it with 0% APR, you pay 0 interest on an already inflated cost. But still it is better than bank finance, unless you have a lower rate LOC.

Bottom line, I would lease a domestic with higher residual value but finance an import (after having researched the model and company).

Good luck in your decision.

Hiren


 
Post ID: 200229 29-08-12 13:45:20
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aqua
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Member since: Jan 11




Posts: 134
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OAC - The dealers want to sell cars. They will get you the credit approval even if you are a new immigrant! They will require some additional documentation like paystub, bank deposit statement etc. In the worst case, a guarantor.

Annual kms - If you drive 16-24K an year, makes all sense to lease (at least for me), as by the end of 4 years, the market value of the vehicle and the upcoming repair costs won't be attractive to still own it. Lease will allow to just return it. If the driving is less, you can buy it out and sell outside and make $.

Repair and maintenance / NA driving experience: Not sure how this makes a difference. Whether you own or lease, you are responsible for repair and maintenance.

Residual price: I never had a luck in getting that changed - different times, due to different needs, I had tried to bring them up and down. Both did not fly - I am always told it is determined by the manufacturer as a set % of the sale price. Dealers has this matrix available.

Another thing about financing is, they add the HST to the financed amount and you are paying interest on the whole vehicle price + HST. With lease, monthly payments are calculated (4 year amortization of sale price - residual price) and then HST is applied monthly. So the interest is paid on around 50% of the vehicle price. So even if the lease rate may be higher than the finance rate, the amount interest amount may not be much different.

Accident is another thing to consider. You bought a vehicle and it gets into accident (your fault or not), the car value drops significantly. If lease, you can just return!


 
Post ID: 200230 29-08-12 16:28:32
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